Production of numerous hormones, neuropeptides and proteins secreted by eukaryotic cells requires proteolytic maturation of precursor-polypeptides, most often by endoproteolytic cleavage at the carboxyl side of pairs of basic residues (Lys-Arg, Arg-Arg, Arg-Lys and Lys-Lys), but little is known about the enzymes responsible for this reaction in higher eukaryotes. The long term goal of this research is to gain a comprehensive understanding of such enzymes in terms of their catalytic specificity, regulation, biosynthesis and compartmentation within the secretory system. The research outlined here addresses a well-defined system: endoproteolytic cleavage at the carboxyl side of Lys-Arg doublets of the precursor of the oligopeptide mating pheromone alpha- factor, secreted by haploid Saccharomyces cerevisiae (hereafter, "yeast") cells of the alpha-mating type. The responsible yeast enzyme has been identified unambiguously by genetic and biochemical criteria. A Ca2+-dependent, membrane-bound protease encoded by the yeast KEX2 gene catalyzes cleavage of the precursor, prepro-alpha-factor, within a compartment of the yeast secretory system. The KEX2 system is an ideal one in which to tackle the central issues that concern processing proteases because of (i) the molecular "tools" at hand with which to analyze KEX2 protein and (ii) the accessibility of the system both to biochemical analysis and to the powerful methods of classical and recombinant yeast genetics. My specific aims are to: 1. Purify KEX2 protease to homogeneity and characterize its catalytic specificity with respect to both small peptide substrates and the natural substrate prepro-alpha-factor. 2. Define the functional domains of the protease involved in catalysis and activation by Ca2+ by (i) determining the location of the active site, (ii) constructing deletions of specific segments of the KEX2 structural gene and (iii) studying the activity of proteolytic sub-fragments of the protein. 3. Delineate the pathway of biosynthesis and posttranslational modification of KEX2 protein and define the structure of the mature enzyme. Determine whether KEX2 protein is synthesized as an inactive precursor, and if so, determine how it is activated. 4. Determine the precise intracellular location of KEX2 protein within the yeast secretory system and benign a genetic analysis of the mechanisms by which KEX2 and other processing enzymes are targeted to and retained within the yeast secretory system.